The editor of Validea explains, "Atwood Oceanics (ATW), a Houston-based offshore oil drilling firm, gets strong interest from both my Benjamin Graham- and Peter Lynch-inspired strategie.

"With a $2.4 billion market cap. Atwood has been a big winner for one of my most stringent -- and most successful -- strategies, the model I base on the writings of the late Benjamin Graham.

Continue reading Atwood Oceanics (ATW): 'Under the Radar'

Atwood Oceanics (ATW): 'Under the Radar' originally appeared on BloggingStocks on Wed, 02 Feb 2011 10:30:00 EST. Please see our terms for use of feeds.

"Two newcomers to our recommended list come from a sector still dogged by fears -- the financial sector; and interestingly, both specialize in a bit of an unusual type of finance: pawn loans," says John Reese.

Here, the editor of Validea -- which focuses on stocks that meet the investment criteria of some of the market's most successful professional investors -- offers a bullish review of EZCorp (EZPW) and Cash America International (CSH).

"Cash America gets approval from my James O'Shaughnessy-based strategy -- as well as from my Benjamin Graham value investing model.

Continue reading Pawn Power: EZCorp (EZPW) and Cash America (CSH)

Pawn Power: EZCorp (EZPW) and Cash America (CSH) originally appeared on BloggingStocks on Fri, 27 Aug 2010 10:30:00 EST. Please see our terms for use of feeds.

Over the years I have referred to "my pal Warren" (Warren Buffet) on many occasions. He has taught me a great deal. I have learned a few things from Sir John Templeton (RIP) as well. But when I think about the price-to-earnings-to-growth (PEG) ratios, it is Peter Lynch who stands tall.

Lynch has been retired for many years and has been generous enough to share some of his thoughts in a couple of worthy books: One Up on Wall Street and Beating the Street. I highly recommend these best sellers to anyone that wants to expand their knowledge of value investing or manage their own finances.

Continue reading Serious Money: Buying the Super Caps, Part 3

Serious Money: Buying the Super Caps, Part 3 originally appeared on BloggingStocks on Wed, 19 May 2010 12:10:00 EST. Please see our terms for use of feeds.

Validea is an intriguing newsletter that selects stocks based on the strategies of the market's most legendary investors. Here, editor John Reese takes a look at Aeropostale (NYSE: ARO).

"This mall-based clothing retailer targets youngsters age 14 to age 17 through more than 900 stores in 49 states, Puerto Rico, and Canada.

"The company has developed a new retail store concept called P.S. from Aeropostale, which will offer casual clothing and accessories focusing on elementary school children between the ages of seven and 12.

Continue reading Market 'legends' like Aeropostale (ARO)

Market 'legends' like Aeropostale (ARO) originally appeared on BloggingStocks on Thu, 08 Oct 2009 15:00:00 EST. Please see our terms for use of feeds.

"Stocks, by just about every long-term valuation measure, are undervalued," says John Reese, who continues to recommend putting money to work in undervalued stocks.

In his Validea newsletter, he selects "undervalued" issues by using screens based on the investment strategies of leading investors such as Peter Lynch, Ben Graham and Warren Buffett. Here's a a look at four current buys in the oil sector.

Reese explains, "If you think you can predict investors' emotional states, or how an unprecedented economic crisis will play out, then go ahead and wait for the bottom. I suffer no such delusions, however.

"Rather than playing the risky game of bottom-calling -- which more often than not leads to investors missing the big initial push of a new bull run -- I'll continue to put money into undervalued stocks.

Continue reading Guru strategies find value in oil sector

Guru strategies find value in oil sector originally appeared on BloggingStocks on Wed, 15 Apr 2009 10:40:00 EST. Please see our terms for use of feeds.

In his Validea newsletter and his just published book Guru Strategies, stock advisor John Reese assesses companies based on the investment strategies of "legendary investors" such as Ben Graham and Warren Buffett.

Recently, the advisor has highlighted two retailers that pass his guru screens: Gildan Activewear (NYSE: GIL) and Jos. A. Bank Clothiers (NASDAQ: JOSB). Here's his contrarian look at the two out-of-favor firms.

"You might never have heard Gildan Activewear, a Montreal-based clothing manufacturer, but you may well have worn its products. Gildan sells T-shirts, sport shirts and fleece to wholesale distributors as 'blanks' -- that is, without logos or decorating. Screen printers then decorate the items with various designs and logos.

Continue reading Guru strategies pick apparel retailers

Guru strategies pick apparel retailers originally appeared on BloggingStocks on Wed, 18 Mar 2009 10:30:00 EST. Please see our terms for use of feeds.

During these times of crushing financial news, collapsing stock markets combined with tremendous volatility, government ineptitude (what else is new), doubt, pessimism, and yes -- fear --- we all need to hear the reassuring words of one of our most successful investment sages.

'My pal Warren' has been filling the media with market supporting bits of wisdom and backing it up by making strategic investments through Berkshire Hathaway (NYSE: BRK.A) and more investments utilizing his personal fortune.

Yesterday I received the following in an email quoting Peter Lynch, who managed to gain an average of 29.7% per year for 13 straight years while he was running Fidelity Magellan fund. Once someone asked him how he knows what stage the market is at, he replied:

• "If I go to a party, and introduce myself as a mutual fund manager to strangers, and they walk away from me and talk to other people instead, I know the market is near the bottom. If they sit down and ask me what stocks they should buy, the market is at normal levels. If they sit down and TELL ME what stocks to buy, the market is near the top."

Continue reading Serious Money: Peter Lynch, a simple view

Serious Money: Peter Lynch, a simple view originally appeared on BloggingStocks on Fri, 24 Oct 2008 15:47:00 EST. Please see our terms for use of feeds.

This post is part of a series in which TheStockAdvisors.com asked financial experts to name their top stock pick if McCain or if Obama wins the election.

"Obama's tax plan would give greater relief to the lower and middle classes; one retailer that would benefit from this is American Eagle Outfitters (NYSE: AEO)," says John Reese, editor of Validea, which follows the investment criteria of "legendary" investors such as Warren Buffett and Peter Lynch.

"Consumers have had to tighten their wallets and purses because of the slowing economy and rising food and fuel prices. Breaks for average Americans would be welcome news for retailers, which have sputtered amid the downturn.

"In the event of a retail surge, this teen-focused Pittsburgh-based clothing chain should be at the head of the line.

"American Eagle gets approval from two of my Guru Strategies -- computer models that are each based on the published approach of a different Wall Street great. What's more, the two strategies that like the firm are modeled after two of the greatest gurus, Warren Buffett and Peter Lynch.

"My conservative Buffett-inspired model looks for stocks with a lengthy history of steadily increasing earnings, as well as a conservative balance sheet.

"Eagle has grown earnings per share in eight of the past ten years, with EPS rising from $0.25 to $1.82 in that time, meeting the first criterion. In addition, the firm has no long-term debt, which my Buffett model loves.

Continue reading Obama stock: Middle-class shopping at American Eagle (AEO)

Obama stock: Middle-class shopping at American Eagle (AEO) originally appeared on BloggingStocks on Fri, 10 Oct 2008 13:00:00 EST. Please see our terms for use of feeds.

This post is part of a series in which TheStockAdvisors.com asked financial experts to name their top stock pick if McCain or if Obama wins the election.

"The GOP is traditionally known as the party that spends more on defense; thus, if McCain wins the election, one stock to benefit would be defense firm General Dynamics (NYSE: GD)," says John Reese, editor of Validea, which follows the strategies of "legendary" investors such as Warren Buffett and Peter Lynch.

"While McCain has talked tough about reforming the defense budget, he has also pledged to increase the size of the military, modernize the armed services, and push hard for strong missile defense systems -- all of which require serious spending.

"As a major producer of battle tanks and assault vehicles, armaments and munitions, battleships and nuclear submarines, and military information technology systems, this Virginia-based firm is thus likely to have quite a bit of work on its hands during a McCain presidency.

"Just as importantly, General Dynamics' finances and fundamentals are very strong, earning approval from both my Peter Lynch and Warren Buffett-based Guru Strategies -- computer models that are each based on the approach of a different investing great.

"Because of its moderate 18.14% long-term growth rate and huge annual sales of $28.7 billion, General Dynamics is considered a 'stalwart' by my Lynch strategy, the type of large, steady firm that Lynch found offered protection during downturns or recessions.

"Two big reasons my Lynch model is high on this stalwart: its yield-adjusted P/E/Growth ratio of 0.75, which signals that the stock is a bargain right now, and its 18.79% debt/equity ratio, a sign that GD has the conservative financing Lynch liked to see."

My Buffett-based model, meanwhile, likes General Dynamics' consistency. Over the past decade, its EPS have declined just once, rising from $1.46 to $5.10 in that time.

"The company's annual return on equity -- a figure Buffett used to find firms with the 'durable competitive advantage' he famously prizes -- has been at least 16.4% every year.

"GD has also retained $22.30 in per-share earnings in the past decade while increasing EPS by $3.64, showing it can earn investors a 16.3% return on the earnings it keeps. That's a sign of the strong management Buffett is also known to look for."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

McCain stock: Defense play with General Dynamics (GD) originally appeared on BloggingStocks on Fri, 10 Oct 2008 10:10:00 EST. Please see our terms for use of feeds.

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.

To some degree, a face-off between Vanguard and Fidelity is really a face-off between John Bogle, Vanguard's founder, and Peter Lynch, Fidelity's star fund manager. While Bogle was a pioneer in no-load and low-cost investing in index funds, Lynch was a proponent of investing in "what you know," or getting investing ideas from your day-to-day life. BloggingStocks covered this Bogle vs. Lynch match up back in September, and readers gave the financial edge to Lynch.

Privately held Fidelity Investments is made up by two independent but closely cooperating companies: Boston-based Fidelity Management and Research LLC serves the North American market, and Fidelity International Limited (FIL), spun off in 1969, provides investment products and services to clients in the rest of the world. Fidelity reported revenue of $12.87 billion in 2006, by offering a large family of mutual funds, as well as providing discount brokerage services, retirement services, estate planning, wealth management, securities execution and clearance, life insurance, and a number of other financial services. The founding Johnson family still controls Fidelity, but Peter Lynch and some other fund managers also hold stakes in the company.

Continue reading Battle of the Brands: Vanguard vs. Fidelity

Battle of the Brands: Vanguard vs. Fidelity originally appeared on BloggingStocks on Wed, 30 Apr 2008 14:00:00 EST. Please see our terms for use of feeds.

"While U.S. banks have struggled amid the credit and housing crises, Credicorp (NYSE: BAP) has excelled," notes John Reese, who assesses stocks based on the strategies of various well-known and time-tested gurus.

Here, the editor of the Validea newsletter looks at the Peru-based banking firm commerical banker and explains how it "passes the test" for four leading guru strategies: Peter Lynch, Martin Zweig, the Motley Fools, and William O'Neill.

"Credicorp's main subsidiary, Banco de Credito del Peru, actually grew its mortgage business 8.2% in the third quarter of 2007 (the most recent quarter for which data is available) as Peruvians' purchasing power continued to increase.

"My Peter Lynch-based strategy considers Credicorp a 'fast-grower' because of its 42.44% growth rate (based on the average of the three-, four-, and five-year earnings per share figures).

"Lynch famously used the P/E/Growth ratio to identify growth stocks selling on the cheap. By dividing Credicorp's 19.6 P/E ratio by that growth rate, we get a P/E/G of 0.46, which falls into my Lynch-based model's best-case category (below 0.5).

Continue reading Creditcorp (BAP): Leading gurus bank on Peru

Creditcorp (BAP): Leading gurus bank on Peru originally appeared on BloggingStocks on Fri, 25 Apr 2008 10:35:00 EST. Please see our terms for use of feeds.

One of history's greatest investors is Peter Lynch, who managed Fidelity's Magellan mutual fund from 1977 to 1990. For the most part, he focused on investments that he understood well, such as GE (NYSE: GE), Kemper, Starbucks (NASDAQ: SBUX) and so on.

So, what is he doing now?

Interestingly enough, he's an investor in a dot-com startup, Jackpot Rewards, which has raised $16.7 million so far.

It's hard to pigeonhole the company. For example, it is a for-profit entity -- yet it plans to contribute 50% of its profits to charitable causes.

The site is a place for consumers to get discounts, such as from Apple (NASDAQ: AAPL), Best Buy (NYSE: BBY), Nike (NYSE: NKE) and so on. And yes, these seem like the kind of companies Lynch would invest in.

Continue reading Peter Lynch looking for a dot-com 'ten-bagger'

Peter Lynch looking for a dot-com 'ten-bagger' originally appeared on BloggingStocks on Wed, 20 Feb 2008 13:45:00 EST. Please see our terms for use of feeds.

Validea selects its recommended stocks based on the criteria of various legendary stock gurus. For one of its latest ideas -- BP (NYSE: BP) -- editor John Reese explains, "The stock gets approval from three of my strategies, earning high marks from the models that I base on the writings of Peter Lynch, James O'Shaughnessy, and Kenneth Fisher."

The advisor suggests, "BP is a London-based worldwide energy company. Among BP's activities are oil and natural gas exploration and production, and the refining, transportation, and selling or trading of crude oil and other petroleum products.

"The oil giant -- with customers in more than 100 countries across six continents -- also has branches dedicated to alternative fuels such as wind, solar, and hydrogen power.

"Because of the firm's 31.77% growth rate (based on the average of the three-, four-, and five-year EPS figures), my Lynch-based model considers BP a fast-grower. To identify growth stocks that are still selling at a good price, Lynch uses the P/E/Growth ratio, which divides a company's price-to-earnings ratio by its historic growth rate.

"P/E/G ratios lower than 1.0 are acceptable according to this model, with those under 0.5 the best case. With a P/E ratio of 10.17 and that 31.77 percent growth rate, BP boasts an excellent 0.32 P/E/G, which falls into that best case category.

Continue reading BP: Peter Lynch would like this stock

BP: Peter Lynch would like this stock originally appeared on BloggingStocks on Tue, 12 Feb 2008 12:46:00 EST. Please see our terms for use of feeds.

Is Peter Lynch's advice for buying retail stocks obsolete? originally appeared on BloggingStocks on Mon, 26 Nov 2007 19:00:00 EST. Please see our terms for use of feeds.

It's been three weeks since our Money Face-Off feature ran here at BloggingStocks and on AOL, offering you the opportunity to share who you though had the financial edge in a series of twenty head-to-head match-ups. So I thought I'd take another look and see how things have worked out.

It's hard to pick just one big winner. In terms of the largest lead over a rival, Ivanka Trump easily beats Paris Hilton with 89% of the vote. Others holding big leads over their opponents include Tiger Woods, Warren Buffett, Steven Spielberg, and Rupert Murdoch.

In terms of receiving the most votes, the clear leader is the Oprah Winfrey vs. Martha Stewart match-up, with just short of 150,000 votes. Other big vote getters were Tiger Woods vs. David Beckham, Rudy Giuliani vs. Michael Bloomberg, and Bill Gates vs. Steve Jobs. In terms of the liveliest discussions in the comments, the winners are Oprah Winfrey vs. Martha Stewart, Erin Burnett vs. Maria Bartiromo, and Bono vs. Angelina Jolie. Also check out the comments for the J.K. Rowling vs. J.R.R Tolkien, Tiger Woods vs. David Beckham, and Ivanka Trump vs. Paris Hilton posts.

As for the face-off posts here that got the most attention, the clear winner is Erin Burnett vs. Maria Bartiromo, with more than 13,000 hits. Lindsay Lohan vs. Britney Spears and Oprah Winfrey vs. Martha Stewart also attracted lots of readers.

Results for all the face-offs follow below, but keep in mind that the voting is still open. It's not too late to add your vote or let us know what you think.

Continue reading Money Face-Off Big Winners: Oprah, Tiger Woods, Ivanka Trump, Erin Burnett

Money Face-Off Big Winners: Oprah, Tiger Woods, Ivanka Trump, Erin Burnett originally appeared on BloggingStocks on Sat, 06 Oct 2007 12:40:00 EST. Please see our terms for use of feeds.

It's been a week since our Money Face-Off posts ran here on BloggingStocks and less than a week since the Money Face-Offs were featured on the AOL welcome page, and the response has been terrific. Many of the face-off polls have more than 50,000 votes thus far, and some of the match-ups are very close.

The closest of all is the face-off of CNBC anchors Erin Burnett and Maria Bartiromo: 50/50 with more than 61,000 votes so far. And the post has garnered 39 comments so far. The commenters have strong opinions, whether defending Bartiromo or Burnett, wishing other anchors had been included, complaining about the photos, or even questioning the Money Face-Off feature itself. Be sure to check it out.

The face-off between the former and current New York City mayors, Rudy Giuliani and Michael Bloomberg, garnered more than 67,000 votes. While Bloomberg has his defenders, presidential candidate Giuliani currently has a small lead in this match-up, with a little over half the votes. Can he hold on to that lead, though?

The match-up of supermodels turned businesswomen, Tyra Banks vs. Heidi Klum, also has more than 50,000 votes so far. In this case, it's Klum in the lead with about 55 percent of the vote. Only one reader, a Tyra Banks fan, has commented so far. Feel free to add your thoughts about which former supermodel you think is more successful.

Continue reading Money Face-Off recap: The 'Money Honey' catfight, and Giuliani's slim lead here too

Money Face-Off recap: The 'Money Honey' catfight, and Giuliani's slim lead here too originally appeared on BloggingStocks on Sun, 23 Sep 2007 09:40:00 EST. Please see our terms for use of feeds.

Few professional money managers have had the success Peter Lynch has had. The former Fidelity manager of the widely-held Magellan mutual fund racked up great returns year after year in his tenure at Fidelity. After he retired in the 1990s, Lynch wrote a few books (which are worthy reads, I might add), and aimed them at the "everyman" of investing: the normal American consumer (hopefully, investor).

Along with Vanguard founder John Bogle, Lynch is someone I've followed for some time, and following much of what he said has, well, done right by me. But, after having talked with many a business associate and family member in the past year -- as the market has swayed to and fro -- few of them follow Lynch's investing strategy. That is, if they have an investing strategy at all beyond pumping 0.5% into that 401k and putting 50% of their portfolios into their employer's stock. Yikes!

The average mutual fund is a dog and laggard, yet salespeople rope everyday people into these expensive funds by the boatload. Bogle would have said, "just buy index funds and be done with it." Lynch would have said, "check the price-to-earnings ratio, make an informed choice, and be done with it." Both are exemplary ways to examine and adjust your portfolio.

Does it take some self-education? Sure it does -- but hey, it's only your money, right? Why would anyone pay an underperforming fund manager when buying a no-cost index fund produces better returns? Yes, in many cases the situation is a bit more complex than that, and tax rules and holding periods (among other things) come into play. Still, do you invest like Peter Lynch did? If not, why?

Do you invest like Peter Lynch did? Maybe you should! originally appeared on BloggingStocks on Sat, 22 Sep 2007 08:40:00 EST. Please see our terms for use of feeds.

This post is part of our Money Face-Offs feature. Let us know who you think comes out ahead in this head-to-head match-up, and check out our other Money Face-Off posts.

If you're into no-cost investing, you've probably heard the name John Bogle before. The founder of the world's most populated mutual fund company, Vanguard Group, Inc., is completely synonymous with the premise of low- to no-cost investing. To the average joe, that means index funds that track whatever index suits your investment tolerance and pocketbook. Bogle has been a fierce critic of the mutual fund industry (along with me), which charges huge sales loads for minimal performance metrics if you were to average out the thousands of them.

Bogle loves to posit this: Who's getting rich from mutual funds? Those who manage them, but hardly anyone else. Bogle continues to burn the active mutual fund industry on the basis of costs alone. He's probably the largest proponent of investor performance there is, even though he is no longer at the helm of Vanguard. Suggested reading for starters: Bogle on Mutual Funds. There are many other fine selections as well.

Continue reading Money Face-Off: John Bogle vs. Peter Lynch

Money Face-Off: John Bogle vs. Peter Lynch originally appeared on BloggingStocks on Sat, 15 Sep 2007 08:10:00 EST. Please see our terms for use of feeds.

• Intel Corporation (NASDAQ: INTC) -- Q3 guidance
• National Semconductor Corporation (NYSE: NSM) -- Q1 earnings
• Western Digital Corporation (NYSE: WDC) -- Q1 guidance

• Texas Instruments Inc (NYSE: TXN) -- Q3 guidance

• Staples Inc (NASDAQ: SPLS) -- Q2 earnings, Q3 guidance
• Office Depot Inc (NYSE: ODP) -- Q2 earnings
• Harley Davidson Inc (NYSE: HOG) -- 2H2007 guidance
• Weyerhaeuser Company (NYSE: WY) -- Q3 guidance

A recap of recent earnings and guidance originally appeared on BloggingStocks on Wed, 12 Sep 2007 14:00:00 EST. Please see our terms for use of feeds.

While I generally believe that beating the market is nearly impossible, I think that the only way to have a fighting chance at doing it is through focus investing: Owning big chunks of only a few stocks. Diversification is the name of the game when it comes to reducing risk and, if you want to be diversified, I suggest an index fund. But if you want to beat the market, you have to bet big on a few stocks -- stocks that you are pretty sure about. Of course, such stocks only come along once in a blue moon. Warren Buffett has said that you only need a few good investment ideas over the course of your life to do extremely well.

If you're going to buy mutual funds with the hope of beating the market, I also believe in focus investing: Pick funds that only own a few stocks. Today's Wall Street Journal (subscription required) has an interesting piece of focus mutual funds like the Permanent Portfolio Aggressive Value fund, which owns just 36 stocks.

If you can find a focus fund with strong management, that's probably your best bet at beating the market with mutual funds. It's very unlikely that even the most talented manager can come up with enough good ideas to beat the market while owning hundreds of different stocks.

Of course, there's a trade-off. Portfolios that aren't diversified will often have greater volatility, and may experience some really bad years, whereas diversified funds will usually perform pretty close to the market.

Focus investing is not for everyone, but I would argue that it's right for most people who want to try to beat the market. Of course, there's nothing wrong with not wanting to beat the market. By giving up on beating the market and settling for an index fund, you'll be able to beat around 80% of active managers.

Focus is the key to beating the market originally appeared on BloggingStocks on Tue, 05 Jun 2007 16:56:00 EST. Please see our terms for use of feeds.